Work used to be a place where you went. But today, work is an activity instead of a location. And thanks to better, faster, cheaper and more flexible IT, employees and entrepreneurs can work from home, from the road, and from the other side of the world.

Long ago, telework passed from theory into practice. Now it's moving from unusual to ubiquitous. Fifty-four percent of companies worldwide reported having teleworkers in 2003, a number that will rise to more than 80 percent in 2005, says a survey conducted for AT&T by the Economist Intelligence Unit, the business information arm of The Economist magazine. Forty-four million U.S. employees work from home at least part time--a number that will rise to 51 million by 2008, according to a 2004 survey by Scottsdale, Arizona, market research company In-Stat/MDR.

What's driving the boom? Studies have found many benefits for employers and workers. Employees are happier because they're close to their homes and families; productivity increases thanks to extended working hours; and costs decline because of savings on travel and real estate.

Entrepreneurs are leading the telework charge, according to Kneko Burney, chief market strategist for In-Stat/MDR. "Small companies are home to the greatest number of telecommuters, more than half the total," she says. "The nature of these businesses--nimble, more integrated with home life-makes them ideal environments for at-home workers."

Behind the advantages, however, are limits and risks. Employing distributed workers does pay, but it will cost you, too. "Maintaining productivity is the issue people worry about most," says Lilly Platt, president of Legato Consulting, a distributed work team consulting firm in Newton, Massachusetts. "The first question they ask is, 'How do I know they're working when I can't see them?'"

Other key issues revolve around maintaining a cohesive corporate culture and sense of identity among people who may rarely or never set foot in the same room, says Dr. Charles Grantham, founder and executive producer of the Work Design Collaborative, a Prescott, Arizona, firm focused on increasing workplace productivity. "Coordination of joint activities, such as appointments and the flow of information, becomes more critical," he adds.

Technology offers us some answers. Grantham says, for instance, that collaboration software can smooth out communication and coordination issues. But while better hardware and software make telework more affordable and effective (go to "Wherever You Go, There You Are" for more on the subject), better management of teleworkers tends to depend on slippery concepts such as trust.

The rest of the solution comes down to management techniques. Telework has been around longer than technologies such as broadband and VoIP telephony--the term telecommute was coined in the early 1970s. In the interim, much progress has been made on finding ways to manage distributed workers and integrate them into conventional staffs. But just because you're good at running your company now doesn't mean you'll be good at it when telework becomes more common. "People who were fair as managers in the regular workplace are going to be challenged when managing remotely," Platt says.

Not every company will or should embrace telework equally, so not every firm's challenges will be the same. To provide a closer look at this topic, Entrepreneur identified three companies using distributed work forces. They include a company whose president and founder regularly works from home and on the road; a company whose CEO lives in a different city from its main operations center and employs home workers and even offshore contract employees in India; and finally, a company using a fully distributed work force with a president who works from home, travels frequently, has a satellite office, and also employs road warriors and telecommuters.

Each company faces different challenges and employs different solutions. One thing all have in common is that they agree there is no going back to the way things used to be.

Homework for the President

Homework for the President

Weekday mornings and all day on Mondays and Fridays, Paul Purdue can be found working in the same room of his farmhouse where he started iFulfill.com Inc., a shipping company serving e-tailers, in 1998. The arrangement lets Purdue spend more time with his family, and VPNs, IM and internet telephony allow him to work from home, including managing the 31 people who ship thousands of packages daily from their Maumee, Ohio, warehouse.

"If an employee IMs me or dials my extension, they get me just as if I were sitting there," says Purdue, 43. "Frequently, people will communicate with me and then go into my office and be surprised by my 'absence.'" He's far from completely out of the office, however. By remotely accessing the corporate computers via a network at his house, he can tell when people arrive at work, how many packages are waiting to be shipped--even who last touched a misplaced shipment.

But technology doesn't have an answer when he is dealing with customer-relations issues and employee disputes when he's not in the office. "Sometimes, communication isn't clear when you're e-mailing," Purdue says. "So every once in a while, I'll ask people to call me, or I'll call them." For example, while he was on vacation once, he got an IM from an employee complaining about another worker. While he was reading that, he recalls, "another [message] popped up from the other employee talking about the first. The solution was to pick up the phone."

Many issues wait until Purdue is actually in the office. "A lot has to do with management structure," he says. "I used to do everything. Now I have a production team, a warehouse manager and a sales manager. The day-to-day things are overseen by managers in those departments. If we were smaller, this would be harder to do from home."

By monitoring workers electronically and in person, Purdue is following one of the tips laid out by Grantham: "Have regularly scheduled check-in times with your teammates." Perhaps more important is the can-do attitude Purdue has developed in growing his company to its current size, with $7.2 million in projected sales this year. "You have to have an attitude that says you can do this, you are in control," Grantham says. "All that leads to learning behaviors to minimize the stress and the uncertainty."

A Tale of Two Cities

In January 2004, Jennifer Fallon, 34, started My Wedding Favors, an e-tailer of wedding and party favors, as a part-time business run from her Atlanta home with her father's help. When her parents relocated to Birmingham, Alabama, My Wedding Favors went along shortly afterward. But rampant growth in the company's first year--estimated 2004 sales are $1.44 million, and projected 2005 sales are $2.1 million--has created a challenge for the former software sales professional, who still makes her home in Atlanta.

Here's the setup: There are six people at the Birmingham warehouse, one customer service representative working from home in Birmingham, an Atlanta-based web designer and an assistant who works in Fallon's home. To top it off, there are also several part-time contractors in Atlanta and India helping to tune up a search engine marketing effort that has proved to be essential to the company's success. Of all this, says Fallon, working from home in Atlanta has been the most challenging.

Like Purdue, Fallon is able to monitor sales and shipping in detail by using a fast internet connection and software that lets her tap into the company computers from home. E-mail is her primary mode of communication, supplemented with conference calls between her, the shipping manager, the office manager in Birmingham and the two lead customer service representatives when a sticky situation arises.

But she still drives to Birmingham every two weeks. One problem has been finding a reliable person to oversee the remote main office--one office manager already had to be replaced. "As a manager before, I felt it was important to evaluate whether [employees] were continuing to develop skills," she says. "Now I can't do that. I have to rely on my office manager and have more meetings with her."

Fallon's need to see employees is common, says Platt. "This is based on the way most of us have managed in the past," she says. "We've managed activity, and if we can't see activity, we don't know the work is getting done. When you're managing remotely, you need to manage results."

When the issue goes beyond results, it's usually due to a lack of trust, Platt says. And building trust is about conveying expectations--both ways. Employees have to know what the entrepreneur expects, and the entrepreneur has to know what the employees expect. Miscommunication of expectations led to Fallon's unsuccessful first hire.

"Talk not just about the work but about how you're going to work together," Platt advises. "Focus the discussion on the expectations, because that's where the trust breaks."

Why Do It?

When researchers asked companies around the globe why they were using more teleworkers, the top answers had to do with better access to the network and better communication facilities at remote sites. Globalization, cost-cutting and business continuity (dispersing staff reduces the risk of a disaster at headquarters halting or slowing operations) all outranked pressure from employees.

Here are the reasons for increased use of teleworkers at companies worldwide in 2003 (as percentage of respondents):

Source: Economist Intelligence Unit on behalf of AT&T

On the Road Again

On the Road Again

Employees of Marty Kotis' 23-person commercial real estate development firm, Kotis Properties Inc., are spread between the company's main office in Greensboro, North Carolina, and a satellite office in Myrtle Beach, South Carolina. Kotis, 36, and his salespeople often find themselves traveling or, in the cases of Kotis and his marketing manager, telecommuting from their homes. Needless to say, Kotis needs tools to keep himself and his employees on the same page, even when they're all in different places.

An impressive array of technology, including handheld wireless PDAs and videoconferencing technology, ties most of these employees together. "I can work anywhere, and, through the technology, I've been able to empower my employees to do the same thing," says Kotis, who personally designed and tested the telework technology and trains employees to use it. Networked calendars, for example, allow Kotis' employees to schedule meetings they would like him to attend, and they also allow Kotis to see who and where his salespeople are meeting.

But even Kotis admits high technology is a blanket that doesn't cover all beds. Some low-tech solutions help with the issue of coordinating all these resources, especially when he spends as many as four days a week on the road. For instance, at the company's headquarters, whiteboards outside the offices of people who spend a lot of time away from their desks describe long-term projects they are working on. Employees at the main office are encouraged to help out with these projects when their own work flow temporarily lags. "Other people can walk around the office, see what those projects are, and talk to that person to see if there's anything they can do," Kotis explains.

For Kotis, however, it all comes down to trust. He has to be able to trust employees to be self-starters, which is something he focuses on during the hiring process. He pays special attention to a candidate's ability to work with technology and his or her personal organizational skills. "I've found that the more technology-savvy and organized a person is, the better [he or she will] be able to deal with this type of environment," he says.

Employees also have to understand others' roles. Office-bound workers sometimes resent what they see as the freedom of others to work from home or elsewhere. In Kotis' case, he keeps resentment to a minimum by making sure that office-based workers have access to the networked calendars, which show the phone calls, appointments and other activities that remote workers are engaged in. "And there's a lot of communication," he adds. "If someone's outside the office for a day, they're [still] talking to the people in the office."

The mode of communication isn't important. What's important is that communication occurs frequently and intensively, especially from leaders to employees, and that it deals with big-picture issues. Says Platt, "The leader has to work hard to see that the vision and mission of the company are in front of people all the time."

Telework in a Nutshell

If current trends toward increased use of teleworkers continue, then it may not be an overstatement to say we are entering a new era of management. It will be characterized by greater reliance on technological monitoring of employees' performance and results, and more emphasis on communicating expectations and long-term objectives. What is the entrepreneur's ideal result? "Engagement," says Grantham. "The outcome of engagement is employee satisfaction, long-term bonding, and increased individual productivity and business performance."

Getting the Grad

Don't expect to lure new hires by offering a distributed work environment. In June 2004, consulting firm Accenture asked 1,501 job-seeking recent college graduates and students expecting to earn their bachelor's degrees in the next six months what they most desired from an employer. Telecommuting ranked dead last, behind shopping discounts and social events.